When Bootstrapping Is Not the Answer – and Other Funding Advice from Yesware’s Matt Bellows

June 27, 2012

2:30 pm

Matt Bellows knows funding. As Co-Founder and CEO of Boston-based Yesware, a sales productivity tool, he closed a $1M seed round in April 2011 and a $4M Series A round this past April.  At his previous startup, he bootstrapped.

While bootstrapping is often touted as the end-all, be-all of funding your startup, it isn’t always the answer.  “We realized that bootstrapping wasn’t going to work for Yesware,” Bellows said.  “It would be a bigger opportunity and require more resources.  We are trying to affect the professional lives of millions of sales people around the world.  That’s a big problem that requires big funding.”

Their seed round was funded by Google Ventures, Foundry Group, Golden Venture Partners, and angel investors in Boston.  For their Series A round, they brought in IDG Ventures, who worked with Yesware’s 3 existing VCs.

“It is not realistic to go in thinking, ‘I need to raise $5M to get this startup off the ground,’” Bellows added.  Those days are long-gone. It is also important to remember that the vast majority of businesses are not VC-fundable for a variety of reasons.”

In his own words, here are the funding and startup lessons Bellows has learned over the years:

In general, don’t raise money if you don’t have to – it is much better to get money from customers rather than investors.  When you bootstrap, things stay in your control.

If you get turned down by investors 999 times, don’t stop – tweak your business plan to work for the assets you can get.  Or turn to bootstrapping, which will force you to change assumptions and execute differently.

Be flexible – ask, “What do I need to execute in order to get this done?”  Your bootstrapped company has to be sustainable from the beginning, so make it that way.

The value of the MBA is quickly going to zero.  Never once in the 100+ meetings I’ve had did anyone ask me about my MBA. If you want to start a company, skip grad school and learn on the job.

Investors want to know what you have done lately.  What have you accomplished in the last 6 months?  When I hire, I don’t care about your resume – I want to see your portfolio if you’re a creative, your Github (code) repository if you’re a programmer.

To entrepreneurs who are thinking about starting a company, it boils down to what are the activities you are undertaking.  VCs care – and they will ask you about this.

Every week, I send an email to my investors and proactively tell them what we have been working on. I do this for two reasons: I never have to feel responsible for keeping them up to date, and it’s a great tool for me to look back on what we have been doing over the past week.  Investors want to know details and, more broadly, what’s your plan?  Where is all of this activity leading?

You don’t want to take too much money, because you won’t know what to do with it, and you’ll end up spending it on things that don’t matter.  If you take too little, though, you can run out quickly and that sends out bad signals. Our $4M round gives us 2-3 years of runway to take Yesware to the next level.

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Monika Jansen is a writer and editor who is happiest pounding out blog posts, newsletters, website content, and other materials. Follow her at: @monikacjansen

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